Competitive Advantage
Supplier Power
high when buyers have few choices of whom to buy from and low when their choices are many; Power of a supplier to be able to impact a price of a product.
Buyer Power
high when buyers have many choices of whom to buy from and low when their choices are few; the ability of buyers to directly impact the price of the product
Support Value Activities
higher up things such as firm infrastructure, human resource management, technology development, etc. An example of this is IT making a human resource structure that rewards good employees more efficiently and will reduce costs.
Entry Barrier
Is a product or service feature that customers have come to expect from organizations in a particular industry and must be offered by an entering organization to compete and survive.
Competitive Advantage
Is a product or service that an organization's customers place a greater value on than similar offerings from a competitor.
Porter's 5 Forces
1. Buyer Power: Buyer has the power to reduce the prices, HIGH when there are multiple choices of whom to chose from 2. Supplier Power: Supplier's ability to influences the prices, high when buyers have FEW choices to choose from 3. Threat of Substitute Products or Services: High when there are MANY alternatives to a product/service 4. Threat of New Entrants: High when it is easy for a company to enter a new market 5. Rivalry Among Existing Competitors: HIGH when competition is fierce, low when competition is complacent
Compare the 3 generic strategies
1. cost leadership (broad market/low cost) 2. broad differentiation (broad market/high cost) 3. focused strategy (narrow market)
Supply Chain
All parties involved in making a new product. This can include people who produce the product and also the customers.
Why are competitive advantages temporary?
Because eventually, your competitors will come up with similar products
Describe the relationship between business processes and value chains
Business process (standardized set of activities) adds value to a company.
Value Creation
Creating value from doing certain tasks called business processes. Makes a company more competitive
Threat of New Entrants
Low when there are high barriers of entry into a new market.
First-Mover advantage
Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage.
Supplier Power
Power of a supplier to be able to impact a price of a product; Is high when buyers have few choices of whom to buy from and low when their choices are many. It is converse of buyer power.
Primary Value Activities
Receive and store raw materials, Make the product or service, Deliver the product or service, and Market and sell the product or service Service after the sale. By having IT it will reduce the costs
Loyalty Programme
Rewards customers based on the amount of business they do with a particular organization. Can be used to trace customer purchases and recognize patterns
Switching Costs
The disadvantage that is placed on the customer when he/she switches companies. Are costs that can make customers reluctant to switch to another product or service. A switching cost doesn't need to have an associated money value.
Threat of Substitute Products
When there are many substitutes to a specific product, the threat is high; when there are few substitutes, the threat is low. If there is a high threat, the company has the risk of going bankrupt